California Class 1 price jumps $3. Fluid milk sales improve. Dean Foods reports better dairy quarter. Canada announces dairy support programs. Find those articles and other dairy economic news updates here.
California December Class 1 milk prices jump $3
California's Class 1 minimum milk prices jumped more than $3 per hundredweight (cwt) in December, hitting their highest points in 24 months.
The December prices brought the 2016 average to $16.26 per cwt in the North and $16.53 per cwt in the South. Both are down $1.42 per cwt from 2015.
Class 1 North ($ per cwt)
December 2016 – $19.22
November 2016 – $16.13
December 2015 – $18.33
January-December 2016 – $16.26
January-December 2015 – $17.69
Class 1 South ($ per cwt)
December 2016 – $19.49
November 2016 – $16.40
December 2015 – $18.60
January-December 2016 – $16.53
January-December 2015 – $17.96
Source: California Department of Food and Agriculture
September fluid milk sales improve
September 2016 packaged fluid milk sales totaled 4.13 billion pounds, up 0.2 percent from September 2015, according to USDA’s Dairy Market News. Sales of conventional products totaled 3.91 billion pounds, unchanged from the previous year, while sales of organic products, at 218 million pounds, were up 13.6 percent. Organic represented nearly 5.3 percent of total sales for the month.
In the conventional aisle, whole and flavored whole milk sales were up 6 percent and 4.9 percent compared to the previous year, respectively. Sales of organic whole milk were up 17.5 percent compared to a year earlier. Conventional and organic fat-free milk varieties had the largest sales declines compared to a year earlier.
Year-to-date, total packaged fluid sales totaled 36.48 billion pounds, down 0.5 percent from a year earlier.
Conventional fluid milk sales totaled 34.56 billion pounds, down 0.8 percent from a year earlier. January-September organic milk sales total 1.92 billion pounds, up 5.5 percent. Organic sales represented about 5.3 percent of total fluid sales for the period.
The figures represent consumption of fluid milk products in federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the U.S.
Global Dairy Trade index up again
Boosted by double-digit percentage increases for cheddar cheese and buttermilk powder and a nearly 10 percent increase for skim milk powder, the Global Dairy Trade (GDT) price index rose 4.5 percent during the latest auction, held Nov. 15.
Compared to the previous auction, prices were higher for all products listed, including: anhydrous milk fat (+4.4 percent to $5,348 per metric ton); butter (+1.1 percent to $4,193 per MT); butter milk powder (+13.3 percent, to $2,623 per MT); cheddar cheese (+11.0 percent, to $3,697 per MT); lactose (+4.6 percent to $787 per MT); rennet casein (+0.6 percent to $6,040 per MT); skim milk powder (+9.8 percent to $2,562 per MT) and whole milk powder (+3.2 percent to $3,423 per MT).
Eric Meyer, HighGround Dairy, called the auction bullish for skim milk powder and cheddar cheese and neutral for whole milk powder and butter.
The next GDT auction is Dec. 6.
Dean’s sales volume brightens outlook
Lower, but relatively stronger, fluid dairy product sales volume improved the financial outlook for Dallas-based Dean Foods, according to the company’s quarterly investor call.
Total sales volume across all Dean products was 651 million gallons for the third quarter of 2016, down 1 percent compared with the same quarter of 2015. Despite the decline, it’s the best year-over-year sales volume performance in at least four years.
Based on USDA total U.S. fluid milk sales data, Dean’s share of U.S. fluid milk volumes for the third quarter of 2016 was 35.1 percent, up slightly from the previous year.
The third quarter 2016 average Class I mover, a measure of Dean’s raw milk costs, was $15.11 per cwt, a 12 percent increase from the previous quarter, but down 8 percent from the third quarter of 2015. The fourth-quarter 2016 average Class I mover is forecast at $15.96 per cwt, up 6 percent on the quarter, but still 2 percent less than a same quarter in 2015.
October global dairy price index continues to climb
Global consumers paid more for dairy products in October, according to the latest United Nations’ Food and Agriculture Organization (FAO) Food Price Index.
The October 2016 FAO Dairy Price Index increased 3.9 percent, following jumps of 13.8 percent in September and 8.6 percent in August.
Falling milk production in the European Union (EU), and lower output in Oceania have raised expectations of tightening export supplies, fuelling price surge in recent months.
Quotations rose for all dairy products, in particular butter, which was bolstered by reduced stocks and sustained internal demand in the EU, combined with a rise in buying interest by importing countries. Cheese prices also strengthened, while milk powders recorded more modest increases.
Globally, the FAO Food Price Index – a measure of monthly changes in international prices for five major commodities – cereal, vegetable oil, dairy, meat and sugar – rose 0.7 percent from September, and is now about 9 percent higher than a year ago.
Wisconsin dairy herds down 35 percent in decade
The number of Wisconsin dairy herds commercially licensed to sell milk fell to 9,360 as of Nov. 1, 2016, according to the state’s Department of Agriculture, Trade and Consumer Protection. The total is down 46 from Oct. 1 and 5,090 less (35 percent) than Nov. 1, 2006.
Canadian government pledges dairy support to offset CETA impact
The Canadian government has allocated $350 million (Canadian dollars, or $260 million U.S.) for two new multi-year programs to support the country’s dairy producers and processors. The programs are designed to offset the potential impacts of implementation of the Canada–European Union Comprehensive Economic and Trade Agreement (CETA).
The programs are designed to help Canada’s dairy sector become more productive while operating under a supply management program, according to Lawrence MacAulay, Minister of Agriculture and Agri-Food.
A $250 million, five-year Dairy Farm Investment Program will provide targeted funding to help Canadian dairy farmers update farm technologies and systems and improve productivity, including the adoption of robotic milkers, automated feeding systems and herd management tools.
A $100 million, a four-year Dairy Processing Investment Fund will help dairy processors modernize their operations, as well as diversify their products to pursue new market opportunities.
Specific implementation details of each program have not been determined.
These programs are designed to offset the impact of CETA, which removes Canadian import tariffs on many EU products, including cheese. CETA also provides protection for EU geographical indicators.
Canadian dairy producers have called for the government to cover economic damages caused by the influx of foreign cheeses. CETA’s impact has been estimated to give tariff-free status for an additional 17,700 tonnes of EU cheese, the equivalent of about 2 percent of Canada’s annual milk production. Critics charge the economic impact will total about $116 million per year. 
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